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Nifty Blues To Continue

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In last week’s article Markets Take a Breather,  I had explained at the beginning of the week that the markets are tired and are not likely to run up further.

My reading of the market proved correct and we observed that the markets rallied but immediately sagged back resulting in a No Gain/ No Loss week for the index. This is a very common occurrence when stocks rally up very quickly due to a change of sentiment and revised expectations.

That said, I still hold on to my opinion as mentioned in the previous article that Nifty will present a great buying opportunity after it falls 80 points from current levels.

On a Macro Level, the Iraq conflict and fall in the rupee is a major concern but soon our attention will shift to the Union Budget due to be announced in July. On Friday last, crude oil prices soared to a nine month high of $115 on account of disruption of supplies from Iraq.

As the monsoon approaches, stocks linked to the rains will be under the scanner. Chief among these stocks are Mahindra and Mahindra, Hero, Dabur and Hind Unilever.

The sugar sector is also interesting right now because Indian producers are expecting a rich haul due  to the export incentive scheme introduced by the government.

Markets Next Week
The Nifty is trading right on a major demand area but a move up from here may not last too long and is likely to fizzle out. A move down, however, will be very interesting. It will trigger a selling spree but that too won’t last very long and shall fizzle out after an 80 odd point fall. A recovery will commence thereafter on the back of huge amounts of buying interest after the selling impetus has been completely absorbed. Entering the market along with this buying spree will be a good decision for the long run. If this happens or more likely, when this happens, I shall have a good set of stocks to invest on the long side for a few months.

Recommendations last week
Wipro: +3.8 per cent profit
Infosys: Still holding positions

Recommendations This Week
Action: Buy (limit order) at 343, stop loss to be placed at 336. Target for this trade is 350.
Timeframe: 4-6days

YesBank (NSE: YesBank)
Action: Buy (limit order) at 561, stop loss to be placed at 540. Target for this trade is 585.
Timeframe: 4-6 days
Trade Well

• Until you become an experienced trader, do not risk more than your disposable income.

• Risk no more than 0.5 - 1 per cent of your capital per trade by adjusting position size to risk.

• Profit percentages mentioned in the column are before deduction of brokerage, taxes and slippage. That’s because each broker charges at different rates.

Prateek Singh is Managing Director, TradeAcademy – An ancillary of RKSV Securities